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Budget Resolutions and Economic Situation

I have listened to some excellent speeches, many of which have been by people who will be leaving this House. It has been a privilege to be here, and I know that we all wish them well in the years to come. I also listened to some good people in Northampton over the weekend. I wanted to know what they thought about the Budget. I hate to say this—no I don't—but they gave me some bad news for the Chancellor, because they told me that the Government had not been honest about the size of the problem that the country faces. They feel that the Government have not been truthful about growth forecasts, their borrowing requirement, or their handling of public sector debt, and they are unhappy with the plan to cut the deficit through increased taxation. My constituents told me that they felt there were just two certainties. The first was the continuation of debt, waste and taxes, and the second was the continuation of pain for themselves and concern for the business world. They thought this was a fairytale Budget of could-bes, might-bes and maybes, and that it did little to eradicate the fears that they have voiced. They did not think it was good enough. The really sad thing was that not many of them felt any great hope for the future—certainly not for the next four or five years. It is worrying that a Chancellor presenting his last Budget should create such an effect. So much for the responses of the people of Northampton. I want now to discuss one of the problems that they identified in a little more detail, however—that of public sector debt. I am not surprised that my sensible constituents expressed concern about this. We have only to look at the Treasury forecasts to understand just how much debt we face. A figure of 44 per cent. of gross domestic product was given for 2008-09. The figure for 2009-2010 is 56 per cent., and it is set to rise to 78 per cent. in 2014-15. That is all because the Government apparently took the advice of a lady we remember well, who won the pools many years ago. When asked what she was going to do with the money, she said she was going to "Spend, spend, spend". That is exactly what has happened in recent years, as illustrated by this Prime Minister's vain boast that he had done away with bust. He thought he was infallible, but we are now paying the price. So certain was he about this that he told the Financial Services Authority to apply a light touch. The policy of spend, spend, spend has ended up just as we all thought it would: with bust, bust, bust. The Prime Minister's arrogance has led to a longer, more persistent recession than we would otherwise have experienced. The real problem for many people is that the cost will be borne by their children and grandchildren, and they will not thank Mr. Blair or Mr. Brown for that legacy. The Government have admitted that public sector debt will increase until 2014-15. Under the Fiscal Responsibility Act 2010, the net debt is required to fall as a share of GDP by 2015-16, but many think that there is little hope of that happening. It will be a long climb out of recession, and it is unlikely that we will have cleared public sector debt by 2030. It is clear that the nation—and, in particular, its small and medium-sized businesses—will face continued difficulty, and will suffer as a result of this Budget and the Government's actions up to this stage. The Chancellor has claimed that Budget pledges will help small businesses, but they tell me that that is not the case. Among the measures that will not help them are the national insurance increases involving a 1 per cent. increase for all employers and a 1 per cent. increase for everyone earning more than £20,000. Those increases represent a massive belt to the confidence of industry at a time when it needs all the confidence it can get. The Federation of Small Businesses tells us that they will cost 57,000 jobs. The Treasury's own economic model suggests that national insurance rises will reduce GDP by 1 per cent. after three years. The Forum of Private Business has said that these measures are not helpful for job creation, and suggested that a 12-month cut in national insurance contributions would encourage small businesses and allow them to hire extra staff. I hope that those on the Government Front Bench are listening because, by golly, if there is one thing we need to do at this moment it is to produce wealth and create the jobs that are vital to the future well-being of this country. I want to touch briefly on the increase in alcohol duty. Many will know that I am a keen supporter of pubs; I enjoy them immensely. However, 2,377 pubs have closed in the past year, thanks to falling beer sales, and seven are going out of business every day. Let us also look at the increase in fuel duty. The Road Haulage Association has claimed that hauliers are already operating on a shoestring budget, and that they desperately need a break. Some have already gone bust and many others are struggling to survive. When VAT decreased to 15 per cent. in January 2009, an extra 2p a litre was levied on fuel, but that was not changed when VAT returned to 17.5 per cent. in January 2010. People feel let down. They feel they were conned, as this has impacted massively on their businesses. Many businesses have told me they are worried about the lack of measures to tackle the underlying problems. The Institute of Directors would have liked to hear more about the deficit reduction. Miles Templeman said:""The Chancellor's GDP forecasts are too optimistic and there is still no sign of a credible deficit reduction"." Businesses wanted to hear that; they wanted to hear what the Government were going to do. They felt let down, and we talked about lack of hope because they did not know where they stood. The CBI remains of the view that the Government's target date of 2017-18 for Budget balance is""too far off to instil the credibility necessary to ensure the UK's public finance position"." I could go on about the plight of small businesses. They are the largest employer in Britain, and if Britain is to recover, small businesses need to be encouraged to grow. They are the life-blood of the nation's creativity: almost 70 per cent. of British creativity comes from this sector. The sector was in the process of producing 2 million jobs up to the recession, at a time when UK plc was shedding 1.5 million jobs. Small businesses are the powerhouse of jobs growth, and the Government need to recognise the importance of encouraging that particular sector to flourish. My party has pledged to do away with a sizeable part of the planned increase in national insurance because it will help that particular sector to do exactly what it does best: grow jobs, be creative, produce wealth. My party has also pledged to cut corporation tax for small businesses and will not tax the first 10 jobs in any new company. That is welcomed by them, too, but the national insurance rise that I just mentioned is bad for job creation. It does not encourage people to get back to work. We should be pushing policies that increase economic growth to get Britain working again. My grandmother would have told anyone that the way to get out of debt is not by spending more money but by recognising that too much money is being spent and doing something about it. This Government have not yet reached that position. Perhaps it is because there is an election coming up; that may well be the truth of the matter. The people to whom I spoke at the weekend felt that this Government had failed them. They said it was time for new thinking, for a new message, for a new approach. They did not want the same tax and spend and waste that they felt had occurred quite sizeably over recent years. They told me it was time for a new Government made up of people who understood the needs of SMEs. I would tell them that this Budget proves that such a Government would exclude the party that has been responsible for it.